Circumstances Leading to HR Internal Investigations

An HR internal investigation may be initiated by an employer under various circumstances including an employee complaint/grievance, allegations of misconduct, violation of company policies, or information from whistle-blowers regarding illegal or unethical practices. HR investigations can also be initiated based on an employer’s observations, legal requirements, or proactive risk management.

Most commonly, investigations are initiated based on formal complaints, if the management or HR observes behaviour that raises concerns, eg, unsafe work practices or environment, they may choose to investigate proactively, regardless of whether a complaint has been filed.

Legal Bases for an HR Internal Investigation

In India, certain laws mandate investigations in specific contexts. For example, the Industrial Disputes Act, 1947 (“ID Act”) requires an employer to investigate into grievances arising from “workmen” (non-managerial level employees). Likewise, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (“PoSH Act”) requires employers to constitute an Internal Complaints Committee (ICC) to investigate complaints pertaining to sexual harassment of women at the workplace.

In cases involving employee misconduct, an employer is required to conduct a disciplinary inquiry before initiating disciplinary action against the employee such as employment termination. This requirement stems from the state-specific model standing orders framed under the Industrial Employment (Standing Orders) Act, 1946 (“Standing Orders Act”) as well as the state specific shops and establishments acts.

Apart from the above, employers in India have the discretion to conduct investigations into violations of company policies, including misconduct, based on their internal policies, code of conduct, ethical considerations, and a commitment to maintaining a safe and fair workplace.

Grievance Redressal Concerns

Employee grievances/concerns are dealt with by different channels, depending on the nature and/or type of concern.

While HR and/or immediate supervisors typically handle employee grievances of relatively simple and straightforward nature, some require to be directed through different internal mechanisms or statutorily mandated channels, depending on their nature, as outlined below.

• Complaints pertaining to sexual harassment of women at the workplace need to be reported to and addressed by the ICC constituted under the PoSH Act.
• Complaints and/or concerns raised by transgender employees are to be dealt with by the Complaints Officer as appointed by the employer under the Transgender Persons (Protection of Rights) Act, 2019 (“Transgender Protection Act”).
• Complaints pertaining to discrimination on the grounds of disability are to be raised with the head of the establishment, under the Rights of Persons with Disabilities Act, 2016 (“Disabilities Act”).
• Other grievances or concerns may be redressed appropriately by a grievance redressal committee (GRC) constituted under the ID Act (which is required to be constituted by industrial establishments engaging 20 or more workmen) or such other internal grievance machinery set up by an employer to address employee grievances.
• While there is no legal requirement to have a specific medium for reporting concerns, employers typically choose to adopt a variety of methods to ensure that employees have appropriate forums to escalate their concerns. These forums include:
1. Designated speak up forums.
2. Specific email addresses for reporting concerns so that issues are directed to the appropriate department, such as HR, compliance, ICC, or legal teams. These emails are typically referenced in employee handbooks, policies, or the intranet.
3. A hotline/online reporting portal.

Anonymity of Complaints

In India, there are no specific legal provisions that either explicitly permit or prohibit anonymous complaints. Accordingly, employers may choose to allow for anonymous complaints to be filed. In fact, there are many Indian employers that have anonymous reporting channels/ethics hotlines, which allow their employees to raise whistle-blowing complaints or grievances anonymously.

While anonymous complaints can encourage employees to voice concerns without fear of retaliation, they can also often be difficult to investigate effectively as it limits the employer’s ability to reach out to the complainant to undertake a detailed fact-finding exercise, especially where the information provided by the complainant may be incomplete or vague.

However, under the PoSH Act, the complaint must be filed by the aggrieved woman herself, or a prescribed person, on her behalf, disclosing her identity. The resolution mechanism set out under the PoSH Act does not enable anonymous complaints to be investigated.

Who Can Carry Out an Internal Investigation?

Unless specified under law (refer to 1.3 Communication Channels for specific types of grievances), the responsibility of carrying out an internal investigation is often determined based on the nature of the complaint and any company policies in this respect.

HR investigations in India can be conducted either internally or externally.

As a general principle, the investigator should not have any conflict of interest vis-à-vis any of the parties involved, ensuring that the integrity of the process is maintained throughout.

In cases where the investigation is conducted internally, it is often managed by the HR department, the ethics, employee relations or legal compliance teams, or by members of the senior management.

Employers may engage specialised agencies or lawyers. While external agencies/counsels are not involved in routine internal investigations, it is quite common to rely on their expertise in matters that may be critical, complex, or sensitive. In such situations, depending on the nature of allegations, employers may engage experts such as auditors, compliance personnel, external lawyers, or forensic/accounting firms.

The key advantage of engaging external counsels is the client-attorney privilege, which would be limited in the case of engagement of in-house counsels.

If external counsels are being engaged to run HR investigations, it is advisable to ensure that such engagement begins from the commencement of the investigation. However, from a practical perspective, there could be instances wherein external counsels are approached after the preliminary investigation has been completed, owing to complexities that are discovered during the course of such investigation.

Circumstances Mandating an Investigation

In India, certain laws mandate investigations in specific contexts.

The ID Act requires an employer to investigate into grievances arising from “workmen” (non-managerial level employees) either through a GRC or its own internal grievance machinery as set up by the employer.

The PoSH Act requires complaints pertaining to sexual harassment of women at the workplace to be investigated by the ICC.

In cases involving employee misconduct, an employer is required to conduct a disciplinary inquiry before initiating any disciplinary action against an employee, such as termination. This requirement stems from the state specific model standing orders framed under the Standing Orders Act, as well as the state specific shops and establishments acts.

Further, under laws such as the Disabilities Act and the Transgender Protection Act, although an investigation has not been mandated, compliance with obligations thereunder would often necessitate it.

Circumstances Precluding an Employer From Conducting an Investigation

As such, there are no fetters from an Indian legal standpoint, that prohibit an employer from conducting an HR internal investigation upon recognition of a disruption in the affairs of the company or upon detecting a wrongdoing.

However, in cases of concerns or allegations where the law specifically provides for an investigation/inquiry mechanism, an employer cannot suo moto initiate an investigation different from the specified forum. For example, in cases of workplace sexual harassment, since there is a separate inquiry mechanism stipulated under the PoSH Act, investigating such a complaint through the HR internal investigation route, would not be appropriate, unless the aggrieved woman has herself chosen not to file the complaint with the ICC and instead proceed with an alternate inquiry/investigation process.

When to Initiate an Internal Investigation

If applicable laws or company policies indicate that investigations need to be conducted in certain circumstances (for example, sexual harassment of women at the workplace), appropriate investigation will need to be initiated.

Otherwise, whenever there is a disruption in the normal affairs of the company, an internal investigation may be initiated, to determine whether it amounts to any kind of violation of law or policy and, if it does, to what extent.

In some cases, the claims/complaints received could be serious enough to warrant an immediate investigation such as a claim of harassment, threat to health and safety, violence at the workplace, etc. Likewise, employers may also opt not to conduct HR investigations for minor or insignificant issues, for example, a disagreement over office seating arrangements, or a trivial complaint about a colleague’s lunch habits.

Given that the objective of an internal investigation is to “intervene at the first sight” in order to eliminate any possible threats such as reputational damage, employee morale issues or legal repercussions, it is advisable to initiate an internal investigation whenever something seems amiss.

Complainant’s Right to Know

In cases where an inquiry/investigation needs to be conducted under applicable laws or company policies, the respective laws and/or policies would typically specify the extent to which the complainant/reporter would need to be kept informed or involved throughout the investigation process.

In other cases, although not legally mandated, it is considered a good practice for employers to inform the reporter/complainant about the initiation of an investigation. Doing so helps maintain transparency, fosters trust, and demonstrates a commitment to fairness.

Having said that, employers will need to balance the complainant’s right to know with the need for confidentiality for all parties involved in the investigation.

The extent of information to be shared with the reporter/complainant will also depend on each organisation’s internal policies and the nature of the case.

While there is no obligation to disclose every detail of the investigation, it is advisable to keep the reporter/complainant informed about any key aspects, such as the expected timelines for the investigation and any significant developments. This ensures transparency and compliance with the principles of natural justice.

Respondent’s Right to Know

In cases where an inquiry/investigation needs to be conducted under applicable laws or company policies, the respective laws and/or policies would typically specify the extent to which the respondent would need to be kept informed. For example, under the PoSH Act, upon receipt of a complaint from the aggrieved woman, the ICC is required to send a copy of the complaint to the respondent within a period of seven working days, allowing the respondent to file his reply to the complaint, within a period of ten working days from the date of receipt of the complaint.

Likewise, in misconduct cases, the respondent needs to be informed regarding the initiation of a disciplinary inquiry by issuance of a charge-sheet, setting out the charges that are identified against the respondent. This ensures that the respondent has the opportunity to rebut or defend the charges, irrespective of whether such an opportunity was provided to the respondent during the preliminary investigation process.

The principles of natural justice require that the respondent be kept informed of the disciplinary hearings and a copy of the inquiry report be shared with the respondent.

In all other cases of HR investigations, the extent of information to be shared with the respondent will depend on each organisation’s internal policies and the nature of the case. For sensitive issues like financial impropriety, preliminary investigations are typically carried out discreetly to prevent potential tampering of evidence or influencing of witnesses. Once the preliminary findings are made, the respondent must be given an opportunity to be heard before any disciplinary action is imposed. If the investigation report forms the basis for the charges set out in the charge-sheet, the principles of natural justice would demand that the findings of the investigation along with supporting material be shared with the respondent when the charge-sheet is issued.

During the pendency of the investigation, if any interim measure is taken against the respondent, such as a transfer or relocation to a different office premise, suspension, or a work-from-home arrangement, the respondent must be promptly informed of such actions and the implication that it will have on their duties, responsibilities, work environment, compensation, or any other relevant aspects of their employment.

Disclosure Requirements With Regulators

Under the PoSH Act, there is a requirement that certain details such as the number of complaints received, complaints disposed of, and cases pending for more than 90 days be included in the annual report submitted to the district officer.

Likewise, in Karnataka, a notification has been issued that exempts certain classes of establishments including IT/ITeS establishments from the applicability of the Standing Orders Act. One of the conditions for eligibility for this exemption is the requirement to notify the labour authorities about disciplinary actions, including suspension, termination, or demotion.

There are also certain disclosure requirements that apply to listed entities under the regulations formulated by the Securities and Exchange Board of India (SEBI) in instances of, inter alia, insider trading, fraud, and similar practices in the securities market.

Likewise, there may be situations where the internal investigation discovers the commission of offences that may be mandatorily reportable.

Except to the extent set out above, there are no requirements under Indian labour laws that impose any disclosure obligations with respect to the opening or conduct of an HR investigation to any regulators.

Undoubtedly, the underlying essence of any investigation is confidentiality, which must be ensured not just by the investigators, but also the persons who are subjected to investigation. Accordingly, the need and significance of maintaining confidentiality must be instilled in the parties throughout the investigation.

It is quite common for the parties involved in an investigation to be asked to sign a Non-Disclosure Agreement (NDA) prior to the initiation of an investigation.

NDAs help ensure that the details of the investigation such as allegations, employee statements and findings remain confidential and are not disclosed to unauthorised parties. It protects the privacy of individuals involved and maintains the integrity of the investigation.

Some laws such as the PoSH Act also place strict confidentiality obligations upon the parties.

Otherwise, the requirement to maintain confidentiality springs from the applicable organisational policies and any contracts executed with the employees, such as the employment contracts or confidentiality and inventions assignment agreements.

Irrespective of the above, Indian courts have emphasised that details such as disciplinary proceedings pertaining to an individual constitutes personal information, which merits privacy.

If the parties involved in the investigation fail to uphold confidentiality, especially if they are in breach of an NDA or other binding terms of employment, including policies adopted by the employer, the employer may take appropriate disciplinary action in accordance with its policies, besides pursuing legal action for breach of contract. Such action could involve seeking remedies for any harm caused by the unauthorised disclosure of confidential information.

The parties in an investigation may also have the right to claim a breach of their privacy before a court of law, if their personal or sensitive information has been disclosed without consent or in violation of the confidentiality agreements in place.

A preliminary fact-finding inquiry can be conducted to gather relevant information and establish the factual context before proceeding with a more formal and comprehensive investigation.

In fact, in misconduct cases, prior to initiation of a disciplinary inquiry (such is mandated under law), it is quite typical for employers to undertake a preliminary investigation or a fact-finding exercise.

At the beginning of the investigation, both the complainant and the respondent are interviewed to gather their respective accounts of the situation.

Individuals who may have any connection to the matter are also interviewed as part of the fact-finding process. This may include those who are named as witnesses by the parties as well as those who may have witnessed the alleged incident/event, and those who could be privy to relevant information, whether through direct observation, involvement, or proximity to the incident.

There are no strict minimum or maximum guidelines regarding the number of witnesses that can be interviewed during an investigation. The discretion to determine the number of witnesses to be interviewed lies with the investigative team.

However, in situations where there are a large number of potential witnesses, it may be prudent to initially screen the witnesses by asking them to provide written statements or answers to key questions related to the investigation. This could help the investigating team to efficiently identify the most relevant testimonies and avoid unnecessary delays, while ensuring that a thorough and fair investigation is conducted.

Refusal to Co-Operate

Unlike the PoSH Act, which grants the ICC the authority of a civil court to summon and compel the attendance of parties for an inquiry, such powers are not typically provided in other investigative contexts.

Many Indian employers outline the obligation of employees to co-operate in company investigations within their company policies as well as the potential consequences for non-cooperation, which may include disciplinary action.

Depending on the situation and company policy, the employer may reiterate the importance of their participation. However, if the interviewee continues to refuse participation, the investigation may proceed on an ex-parte basis, meaning that the investigation can continue without the interviewee’s participation, using the available evidence and testimonies from other parties to draw a conclusion.

In fact, the PoSH Act enables the ICC to terminate the inquiry proceedings or to give an ex-parte decision, if the complainant or respondent fails, without sufficient cause, to present themselves for three consecutive hearings convened by the Presiding Officer. However, such termination or ex-parte order will have to be passed only after giving notice in writing, 15 days in advance, to the party concerned.

If an interviewee refuses to co-operate or participate in the inquiry proceedings, in whole or in part, documenting the refusal or selective participation would also be essential. This ensures that the refusal is officially recorded and can be referenced, especially if the disciplinary action is contested at a later stage claiming incomplete or flawed investigation owing to their non-participation.

Mode of Conducting Interviews

In India, there are no specific legal requirements dictating that interviews must be conducted in-person during internal investigations. Accordingly, interviews can be conducted both virtually and/or in-person. It is left to the discretion of the employer to decide the format, depending on the specific circumstances, resources and preferences.

An in-person interview can offer several advantages including:

• fostering a strong sense of trust and rapport between the interviewer and the interviewee, making it easier for individuals to share pertinent information;
• enable the interviewer to observe body language, facial expressions and other non-verbal cues that can provide insights into the interviewee’s responses;
• creating an environment that minimises distractions, facilitating a smoother dialogue and deeper explanation of the issues at hand; and
• enhancing the perception of confidentiality.

However, in the case of large organisations having multi-state presence or if the interviewees are located in different cities, it may not be practically and logistically possible to conduct in-person proceedings.

In such cases, leveraging virtual tools can facilitate the investigation process, while ensuring that the necessary information is gathered. Accordingly, some situations may warrant the need for virtual interviews, which may also be recorded by the employer by notifying the parties or by obtaining their consent.

Rules Regarding Interviewers

While the PoSH Act and the ID Act specify certain criteria on how the ICC and the GRC need to be constituted respectively, as such, there are no strict rules governing the number of interviewers or their specific skill-sets under Indian labour laws.

With respect to an investigation/inquiry under the PoSH Act, the ICC is required to consist of at least four members, with the Presiding Officer being a senior level woman employee, the external member being from a non-governmental organisation or an association concerned with the cause of women, and the rest of the two members being from amongst employees, preferably committed to the cause of women or who have had experience in social work or have legal knowledge.

The law also prescribes that at least one half of the members of the ICC must be women and that while conducting the inquiry, a minimum of three members of the ICC, including the Presiding Officer, shall be present.

For all other internal HR investigations, members who have sufficient experience and prior knowledge handling such matters are often appointed.

While interviewers should ideally be of sufficient seniority, on the flipside, having a very senior member could also intimidate the interviewees and, therefore, a balanced approach may need to be adopted to create a comfortable environment for the interviewees.

As a general principle, it is crucial that the interviewers remain neutral and do not have any conflicts of interest related to the parties involved.

While the number of interviewers can be determined by the employer on a case-to-case basis, generally, one or two interviewers are present during interviews and having at least two members helps ensure a more balanced perspective besides reducing any potential risk of bias.

There is no requirement under Indian laws to have neutral parties present during interviews.

While there is no specific statute that prohibits or permits the presence of such neutral parties during an internal investigation, it is recommended that these functions be undertaken by members of HR, to avoid breaches of confidentiality and instances of tampering with witnesses or the integrity of the investigation.

However, in PoSH cases, the inquiry proceedings should be conducted only by the ICC members. Given the strict confidentiality obligations thereunder, the presence of any neutral third-party should be strictly avoided.

For industrial establishments governed by the Standing Orders Act, the model standing orders in some states allow for employee representation by a colleague or co-worker, whereas the model standing orders in some other states allow for employees to be represented by office bearers of a trade union. However, since the applicability of the Standing Orders Act is limited to only non-managerial employees in select “industrial establishments” (primarily referring to factories; however, covering commercial establishments in select Indian states), generally speaking, company policies would regulate whether representation is permitted during an inquiry.

With respect to other organisations that are non-unionised and where there are no internal policies that provide for the presence of such support persons, as such, there is no requirement for interviewees to be provided the right to bring a companion at an investigation or any other meeting.

Unlike under the PoSH Act, where the parties to an inquiry are restricted from bringing a lawyer, such a blanket prohibition does not exist for other investigation proceedings.

Accordingly, an employer has the ability to set reasonable restrictions on who can accompany an employee. For instance, an employer may restrict companions to internal staff (such as a colleague) rather than external parties (like lawyers).

However, it is imperative that such restrictions do not infringe an employees’ right to a fair process. For example, if the investigation is being conducted by an external counsel or a panel of lawyers, the interviewee might request for legal representation, which may be allowed.

While the law does not specify any particular information that needs to be provided to the interviewees, it is important for interviewers to provide certain information to the interviewees at both the start and end of the interview to create a transparent and supportive environment, which encourages honest and open communication during the investigation.

At the commencement of the investigative interview, it is critical to explain to the interviewee the reason for the interview and the context for the investigation.

However, the level of detail provided to the interviewee should be carefully considered, taking into account their role in relation to the investigation. For example, a witness should be provided with sufficient context to understand their role in the process, but not necessarily the full scope of the investigation. In contrast, in a disciplinary inquiry, the respondent will need to be made aware of the specific nature of the concerns/charges levied against them.

At the start of the interview, it is also essential to explain the confidentiality obligations and reassure the interviewee that participating in the investigation will not lead to retaliation or negative consequences.

If the interviewee has a right to representation under law or company policies, they can also be informed of the same.

If the interviewer is an external lawyer, an Upjohn warning (a corporate Miranda warning) may be provided upfront, clarifying that the employee is speaking to the employer’s attorney who represents the employer and not the individual employee. It informs the employee that the information shared during the interview may be protected by attorney–client privilege, but that this privilege belongs to the employer and not the interviewee. It further explains that if the employer decides to waive the privilege or if there is a subsequent legal proceeding, the information could be disclosed.

At the conclusion of the interview, the interviewer may provide a summary of what was discussed to ensure that the parties are aligned on the details shared.

If necessary, the interviewer should outline any further steps in the investigative process, including potential follow-ups, timelines for resolution, and how additional information will be handled.

The interviewer should also ideally provide their contact details, encouraging the interviewee to reach out should they have any further questions or if they wish to share any additional information later.

Finally, it is important to reiterate the confidentiality and non-retaliation commitments.

If an interviewee requests to stop the interview, the interviewer should immediately respect the request and pause the proceedings.

It will thereafter be crucial for the interviewer to understand the underlying reason for their reluctance or inability to continue. For example, this could be due to factors such as discomfort, fear of retaliation, or other personal concerns.

Even after addressing the interviewee’s needs/concerns, if the interviewee explicitly refuses to continue and/or does not co-operate in the interview, the interview may need to be closed.

In such instances, however, the investigation will continue, utilising the available evidence and testimony.

Documenting Minutes

Though not legally mandated, minutes of interviews are typically recorded. Summarised minutes are also acceptable so long as they accurately reflect the discussions. This documentation helps ensure transparency and can be important for future proceedings or reviews.

It is also a recommended practice that interviewees review and sign-off on the minutes. This allows the interviewees an opportunity for providing any clarifications or corrections. The written acknowledgement also serves as a formal confirmation that they have reviewed the minutes, there was no coercion, and that the information represents the matters discussed during the interview accurately.

It is not necessary for an external party to take down the minutes. In fact, for reasons related to confidentiality and data security, it is often considered more appropriate to have an internal stakeholder handle the task of recording the minutes.

Recording of an Interview

Interviews conducted as part of an investigation process may be recorded.

However, since India recognises the right to privacy as a fundamental right, employers will need to strike a balance between the need to record interviews and an individual’s right to privacy. Therefore, it is advisable to notify the employees’ prior to commencement of the interview or obtain their consent.

The transcript is to be shared strictly on a need-to-know basis. Only the investigating officers directly involved in the investigation process should have access to it.

Owing to confidentiality and data protection concerns, as a matter of general practice, such transcripts are not provided to the interviewees, unless specifically asked for.

Collecting and Preserving Evidence

In addition to conducting interviews, investigative officers may resort to various methods of fact-finding. This includes:

• examination of relevant documents such as emails, memos, reports, and personnel files;
• review of footage from Closed-Circuit Television (CCTV) cameras; and
• monitoring and analysing activities conducted on employer-owned computer systems and devices.

The engagement of experts also adds immense value to the investigation, for example, the role of experts in computer forensics gains significance where involvement of multiple parties is deciphered or where the source of the misconduct or the duration for which such irregularities have been undertaken needs to be specifically traced by way of digital evidence recovery. Likewise, a forensic analysis could be undertaken to trace financial transactions, especially in those investigations uncovering financial fraud.

In order to preserve any physical or digital evidence, it will be essential to maintain a clear chain of custody and clearly document when and how evidence was collected, who handled it and where it was stored in order to ensure its integrity.

While there is nothing that expressly prohibits certain types of fact-finding, certain types of fact-finding methods could be deemed inappropriate due to legal, ethical, or organisational considerations. For example, unauthorised surveillance of employees beyond what is legally permissible, such as examining personal devices without consent or fact-finding methods that may involve discrimination based on protected characteristics, could be viewed as illegal and unethical.

Protection of the Reporter/Complainant

In cases of workplace sexual harassment of women, the PoSH Act specifies interim measures that may be taken during the pendency of an inquiry. These include, transferring either party to a different workplace, granting leave for a prescribed duration, or restraining the respondent from evaluating the complainant’s performance. There are also strict confidentiality obligations under the PoSH Act.

Similarly, under the Companies Act, 2013 (“Companies Act”), every listed company and certain other companies are required to implement adequate safeguards to prevent victimisation of employees or directors who utilise the vigil mechanism. While the Companies Act does not explicitly spell out the specific protective measures, it requires companies to take reasonable steps to protect whistle-blowers from retaliation.

Otherwise, there are no explicit legal provisions detailing the actions an employer must take during or after an internal investigation to protect the reporter.

The measures an employer takes to protect the reporter/complainant are largely determined by the specific facts and circumstances of each case. For instance, if there are concerns that the respondent may interfere with the investigation or create a hostile or unsafe work environment for the reporter or other employees, the employer might implement measures such as allowing the complainant to work from home, transferring either of them to a different location, providing them time off from work or, in more severe cases, suspension of the respondent. As a matter of prudence, the actions taken should be based on the potential risks involved.

If there is a potential risk, it is pertinent that the employer takes that into account and take reasonable steps to protect the reporter, to prevent any untoward incident, failing which, the employer could be held liable, including for negligence.

While there are no potential adverse consequences for taking any measures to protect the reporter, in case such measures include suspension of the respondent, it shall be imperative for the employer to discharge all suspension related obligations, including payment of subsistence allowance during the pendency of the investigation as per applicable statutes and company policies.

Overall, it is essential for employers to take safety concerns seriously and act proactively to ensure a safe working environment and protect complainants/reporters/whistle-blowers.

While the principles of natural justice require a fair and unbiased process for all the parties involved including the respondent, as such, the law does not prescribe any specific measures that an employer needs to take to protect the respondent.

Having said that, from the perspective of creating a safe environment for all employees, it is quite common for employers to have policies prohibiting retaliation against parties involved in an investigation, including the respondent.

As provided in the PoSH Act, employers are also expected to maintain confidentiality during investigations to protect the privacy of all parties involved. Accordingly, employers are free to obtain confidentiality declarations from the parties involved in an investigation. Refer to 2.4 Confidentiality Agreements and NDAs regarding execution of NDAs.

While there are no adverse consequences as such for taking steps to protect a respondent from retaliation, in extreme cases leading to severe misconduct or harm, failure to take necessary steps by the employer could expose the employer to legal liabilities.

It could also adversely affect employee morale and the public perception of the employer, which could, in turn, have long-term effects on business operations.

Disciplinary Actions Before Concluding an Investigation

While an employer may take interim measures during the pendency of an internal investigation (see 4.1 Protection of the Reporter), disciplinary/punitive action against the respondent for “misconduct” can be taken only once the disciplinary inquiry process has concluded and the misconduct has been established in such inquiry.

If the conduct in question does not amount to misconduct, employers have greater discretion in terms of taking disciplinary actions prior to completion of the investigation.

However, employers will need to be cautious about taking disciplinary actions prior to completion of the investigation, as this could expose them to legal challenges for non-compliance with the principles of natural justice, wrongful termination, or otherwise.

While there is no specific legal mandate that an employer needs to take actions to protect other employees during the course of an investigation, the employer may take whatever action is reasonable in view of the gravity or seriousness of the matter. For example, if the matter pertains to workplace safety, it is better to err on the side of caution and initiate appropriate steps to ensure the safety and wellbeing of its employees, failing which, depending on the facts and circumstances of each case, the employer could be exposed to legal, financial, and reputational repercussions.

Procedural Guarantees

Owing to the highly subjective nature of the investigations, there is no set mechanism or strict procedure under law, which needs to be adhered to, for conducting such investigations.

While the law does not prescribe any specific procedural guarantees or minimum requirements for an internal HR investigation, an investigation/inquiry conducted under the PoSH Act and/or a disciplinary inquiry conducted by an employer in an alleged instance of misconduct, will need to follow the due process under law which, inter alia, requires the sexual harassment complaint or the charges levelled against the respondent to be shared with the respondent, allowing the respondent an opportunity to respond to such allegations in writing.

Both the complainant and the respondent should also have the opportunity to appear before the ICC or the inquiry officer (as the case may be), to present their side of the story, submit evidence and call witnesses. The findings of the inquiry also need to be communicated to the parties along with the actions taken pursuant to the findings. The PoSH Act also prescribes a 90-day timeline for completing the inquiry.

While these procedural guarantees/minimum standards do not strictly apply to other types of HR internal investigations, many of the principles such as fairness, confidentiality, and the right to be heard are applicable to other investigations as well.

It is advisable that employers adopt a consistent approach to handling HR investigations as it not only protects the rights of all individuals involved, but also helps mitigate legal and reputational risks for the organisation.

In India, employers can and often should formulate protocols or internal guidelines for conducting internal investigations as it helps ensure compliance with legal requirements, promotes fairness and protects the rights of all parties involved. In fact, many employers in India, especially the larger ones and those in the regulated industries have established detailed investigation protocols, as it helps manage workplace issues effectively.

Although internal regulations are not legally binding the same way that laws are, they are considered binding within the organisation.

Any deviations from the same can lead to, inter alia, claims of unfair treatment or procedural lapses, besides legal challenges including cases of wrongful termination, harassment, and so on.

Mishandling investigations can also harm an organisation’s reputation internally and externally, affecting employee morale and stakeholder trust.

Employers often formulate these internal regulations as “guidelines”, allowing sufficient discretion to be exercised based on the specifics of each case.

In an internal investigation which is only a fact-finding exercise, as such, neither party is obligated to prove their innocence, unless the investigation advances to a formal stage, such as a disciplinary inquiry.

In a disciplinary inquiry, since the employer initiates the same, typically, the employer bears the burden of proof, needing to substantiate allegations against the employee. However, the standard of proof is usually “preponderance of evidence”, meaning that the evidence must show that the misconduct is more likely than not to have occurred.

In PoSH matters, the burden shifts to the respondent after the complainant establishes a prima facie case, requiring the respondent to then provide evidence to refute the claims.

Judicial precedents have differentiated between criminal proceedings and disciplinary inquiries in terms of the standard of proof. While criminal proceedings require proof “beyond a reasonable doubt” to establish guilt, disciplinary matters only require a lower standard of proof “on the balance of probabilities” or “preponderance of probability”. This essentially means that the allegation is considered proven if it is more likely than not to have occurred.

Concluding an Investigation

In India, there are no specific laws that dictate exactly when an HR investigation must conclude.

Generally, an internal investigation should be concluded once the employer has gathered sufficient evidence, interviewed relevant parties, and evaluated the findings.

Under the PoSH Act, the ICC is required to complete its inquiry within 90 days from the date of receipt of the complaint. This timeline is indicative of when an inquiry under the PoSH Act should be concluded.

Communication Procedure Upon Investigation Closure

In a fact-finding internal investigation, although there is no specific communication procedure prescribed under law, once the exercise has been concluded, typically, the investigators would submit a detailed report with its findings to the management.

Depending on the facts and circumstances of each case, the employer would determine the stakeholders who will need to be informed of the findings. In some cases, investigations maybe conducted without the knowledge of the employee against whom the allegations have been levelled and therefore there may not be a need to inform such employee about the outcome. However, if the investigation report forms the basis for a disciplinary inquiry thereafter, the principles of natural justice would require that the findings of the investigation be shared with the concerned employee along with the charge-sheet or during the inquiry process.

Once such determination is made, a confidential communication is sent to the relevant stakeholders, summarising the key findings, without disclosing any sensitive information.

However, in a disciplinary inquiry as well as an inquiry under the PoSH Act, a copy of the inquiry report will need to be shared with the complainant and the respondent upon conclusion of the inquiry.

In fact, under the PoSH Act, there is a provision which requires the findings to be shared with the parties (prior to issuance of the ICC report), enabling them to raise any objections to the same, if required.

While a written investigation/inquiry report is mandatory in both disciplinary and PoSH matters, in the case of other HR investigations, as a matter of good corporate governance, the conclusion of the investigation is documented in the form of a written report. This report serves as a formal record of the investigation’s findings.

Format of the Investigation Report

While there is no prescribed format of an investigation report under law, an investigation report should ideally include the following:

• title of the report, including the date and name of the investigators;
• an executive summary;
• an introduction comprising the background;
• the methodology followed by the investigators, ie, the description of the investigative process, including interviews conducted and evidence gathered;
• findings, ie, the presentation of facts uncovered during the investigation organised by themes or allegations;
• an analysis, which is essentially an interpretation of the findings in light of the relevant laws and policies; and
• the conclusion section, with the summary of the overall findings and whether the allegations have been substantiated.

The report can also include appendices such as supporting documents, interview transcripts and meeting minutes.

In so far as PoSH matters are concerned, the ICC is also expected to provide recommendations to the employer on the disciplinary actions that need to be taken based on the employer’s policies.

Refer to 6.2 Procedure for Ending an HR Internal Investigation.

In certain situations, depending on the nature of irregularity or offence, the position held by the concerned persons, the potential exposure that the conduct has upon the company and/or its personnel, the conclusion of an internal investigation may have to be communicated/disclosed to external authorities, including the police; for example, in cases of serious fraud, corruption or criminal acts. The outcome of the investigation would essentially be determinative of whether the offence has to be reported, and if so, who would be the appropriate authority.

There is no requirement to communicate the conclusion of the internal investigation and/or its findings to witnesses and other team members.

If the charges of misconduct are substantiated in a disciplinary inquiry, judicial precedents require that any resulting disciplinary action should be proportionate to the severity of the offence.

Factors that are typically considered when deciding on the quantum of punishment include the gravity of the offence, the frequency of the acts or omissions, and the degree to which they damaged the company’s reputation or disrupted workplace harmony or caused any sort of harm to other personnel.

For minor to mid-level offences, imposition of a fine, reduction in remuneration, demotion, withdrawal of incentives or other employee privileges, and/or issuance of a warning letter/official reprimand, and other measures, may be considered.

In more serious cases or in the event of a gross misconduct, suspension or termination of employment may be considered.

Before any disciplinary action is taken, the employer will need to ensure that the same aligns with the employer’s policies and applicable labour laws. The chosen disciplinary action must be proportionate, justified and documented.

Employers often adopt other measures, such as team-building activities, sensitivity training, offering support systems, mediation, etc, irrespective of whether the allegations are substantiated. Typically, such measures are adopted when there are broader workplace issues to address, such as workplace toxicity, insensitivity, or a lack of respect for personal boundaries, with the goal of identifying areas for improvement within the organisation and are designed to foster a positive workplace culture.

Personal Data in HR Investigations

The Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (collectively referred to as “Indian Data Protection Rules”) protect both the “personal data” and “sensitive personal data” (SPDI) pertaining to individuals.

While “personal data” relates to an individual, which either directly or indirectly in combination with other information, may be capable of identifying a person such as a person’s name, contact details, address, etc, SPDI consists of specific items of data, namely passwords, financial information, physical, physiological and mental health condition, sexual orientation, medical records and history, and biometric information, etc.

While there are no specific compliances under the Indian Data Protection Rules for collection, handling or storage of an individual’s personal data, in the event of unauthorised sharing or misuse of such information causing harm to an individual, penalties may be imposed in the form of imprisonment and/or fine.

On the other hand, there are certain compliances applicable to entities that collect, handle or store SPDI. Accordingly, organisations would need to adhere to such compliances when conducting internal investigations, such as, providing employee(s) with adequate notice and disclosure(s) that their SPDI may be collected for the purpose of an employer-initiated investigation.

The collection of data must be based on the principles of proportionality and necessity, ensuring that only relevant data is gathered. Employers must also safeguard the data against unauthorised access, besides following the necessary confidentiality and security norms. Violating such requirements could lead to penalties under the Indian Data Protection Rules, and the PoSH Act (for breach of confidentiality in PoSH matters).

In a scenario wherein the SPDI may have to be transferred to any other “body corporate”, for example, to any third-party agency or a group entity assisting the employer with the investigation, the transferee will also need to ensure the same level of data protection that is adhered to by the transferor.

Refer to 7.1 Collecting Personal Data for further details.

Access to Personal Data

The Indian Data Protection Rules specify that a body corporate or any person acting on its behalf shall permit the providers of information, as and when requested by them, to review the information they had provided and ensure that any personal information or SPDI found to be inaccurate or deficient is corrected or amended, as feasible.

However, given that SPDI cannot be collected, stored or shared beyond the extent to which the employees have consented to, parties other than the investigators or allied agencies should not be provided access to an employee’s personal data unless specific consent has been obtained in this respect.

If access to such information is necessary for the respondent to mount a proper defence, the principles of natural justice may require that the respondent be granted access to such information; however, the consent of the data holder shall be obtained before disclosing any such information.

Whistle-Blower Protections

Under the Companies Act, there is a requirement to set up a formal vigil mechanism or whistle-blower policy for public companies and certain other entities. Any concerns raised must be directed to the Audit Committee or the Board of Directors, as the case may be. A similar requirement also exists under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Although the Companies Act does not provide a specific definition for “whistle-blowing”, it refers to reporting of “genuine concerns”. While the term “genuine concerns” has also not been defined, it generally refers to serious issues that could impact the integrity and operations of an organisation such as instances of fraud, financial mismanagement, or corruption.

Currently, private establishments fall outside the scope of this requirement, and hence they have the discretion to determine whether or not they would like to adopt a whistle-blower regime. In practice, many Indian employers have set up online speak up forums and/or ethics hotlines that allow their employees to raise whistle-blowing complaints in a transparent manner.

Additionally, the Whistle Blowers Protection Act, 2014 also enables any person to report concerns pertaining to:

• an attempt to commit or commission of an offence under the Prevention of Corruption Act, 1988;
• wilful misuse of power or discretion; and
• attempt to commit or commission of criminal offence by public servants.

Protections Against Sexual Harassment and/or Violence

Indian law offers legal protection against sexual harassment.

Indian law provides specific protections for allegations of sexual harassment and violence under the PoSH Act as well as the provisions of the Bharatiya Nyaya Sanhita 2023 (BNS), the Indian criminal law regime.

The PoSH Act defines “sexual harassment” as any form of unwelcome act or behaviour such as physical contact, sexual advances, demands for sexual favours, or offensive remarks. It covers situations where such acts create a hostile work environment or adversely affect a woman’s employment. The law protects women, including interns, contractual workers, and domestic help, in workplaces across formal and informal sectors.

Under the PoSH Act, employers must establish an ICC to investigate allegations and recommend remedies, including disciplinary action.

The law ensures confidentiality during proceedings and prohibits retaliation against complainants.

Victims of workplace sexual harassment may also seek interim relief, such as transfers or leave.

In cases involving criminal violence, survivors can file a police complaint for prosecution under the BNS.

Refer to 1.3 Communication Channels for further details.

Discrimination Protections in India

While there are specific laws that protect specific characteristics (refer to 1.3 Communication Channels), the primary source of such legal protection is the Constitution of India.

The Constitution of India prohibits discrimination based on religion, race, caste, sex, or place of birth (Article 15) and ensures equality in public employment (Article 16). However, such rights can only be enforced against the state.

With respect to specific types of protections, workplace discrimination or harassment related to caste is addressed under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989, which penalises acts of humiliation or exploitation of individuals from such communities.

The Transgender Protection Act and the Disabilities Act prohibits discrimination against transgender persons and based on disability.

The HIV & AIDS (Prevention and Control) Act, 2017 explicitly prohibits discrimination against individuals living with HIV in the workplace, besides promoting awareness and sensitivity amongst employees.

Discrimination against pregnant employees is prohibited under the Maternity Benefit Act, 1961. Accordingly, female employees cannot be discriminated against or removed from employment during their maternity period.

Additionally, harassment based on gender identity or sexual orientation is protected under rulings like Navtej Singh Johar v Union of India, which decriminalised homosexuality and recognised LGBTQ+ rights.

Employers are also obligated to create inclusive workplaces by mandatorily adopting and framing equal opportunity policies and implementing appropriate grievance redressal mechanisms to address discrimination claims arising therefrom.

Although Indian law does not explicitly define “bullying” or “mobbing” as standalone terms, such conduct may fall under broader harassment laws. Certain legal provisions and workplace policies offer protections against such behaviour when it results in harassment or discrimination. For example, the Standing Orders Act allows for disciplinary action against employees engaging in misconduct, including verbal abuse or creating a hostile work environment.

In India, if the internal investigation discovers the commission of offences that are mandatorily reportable under Indian criminal laws such as rape, then the same may have to be reported to the relevant authorities. In other cases, although the conduct discovered may amount to a criminal offence (eg, fraud or financial impropriety), the employer may decide whether to file a criminal complaint before the appropriate authority.

In case criminal charges are filed during the pendency of the investigation, judicial precedents have held that both proceedings can take place simultaneously. The employer also has the option to stay the investigation for a reasonable period till the conclusion of the criminal proceeding having regard to the specific factual matrix of the case.

In case of multi-jurisdictional internal investigations, due adherence to laws in the respective jurisdictions, including labour laws and privacy laws, will need to be ensured. This includes compliance with the General Data Protection Regulation (GDPR) in the EU or similar laws in other countries.

When sharing data across borders, stakeholders must ensure adherence to applicable data protection laws and obtain necessary consents from the concerned parties. Legal counsels in each jurisdiction may have to be engaged to understand the legal implications and compliance requirements.

While there is no specific law that prohibits foreign employers from carrying out internal investigations within India, the general preference is to have representatives at the ground level within the concerned jurisdiction to understand the cultural background better and to ensure that due compliance under applicable local laws is maintained.

As such, there is no requirement under any applicable labour laws in India that the investigation officer must necessarily be employed with the Indian employer (except in the case of PoSH matters, where the ICC members are expected to be employees of the company in India).

In terms of whether such officer needs to be physically located in India, the location should not matter so long as they are able to conduct the investigation effectively by considering the legal and cultural context of the workplace.